Report Overview

Increasing popularity of digital banking services, surging growth for lending analytics, and deepening penetration of smartphones are expected to propel the growth of South Africa P2P Lending Market during the forecast period between 2023 and 2029.

South Africa P2P Lending Market – Industry Trends & Forecast Report, 2029

South Africa P2P lending market size was estimated at USD 1.69 billion in 2022. During the forecast period between 2023 and 2029, South Africa P2P lending market size is expected to grow at a CAGR of 31.03% reaching a value of USD 11.12 billion by 2029. Major factors driving the growth of the South Africa P2P lending market are the emergence and rapid expansion of online P2P lending models across the country. The ability to create a regulatory framework that provides guarantees to market participants and consumers would be critical for a rapidly growing market. Growth expectations in the P2P lending sector are expected to remain steady due to variables, such as interest rate increases, competition with banks, and consumer market size. The lending is expected to accelerate the peak, smoothen corporate operations, and provide simple solutions for individuals and businesses. Several encouraging initiatives have been taken toward building a specialized legislative response to this emerging industry, which provides additional and critical channels of funding for people and startups.

South Africa P2P Lending Market - Overview

Peer-to-peer lending, also known as P2P lending, is a method of lending money to individuals or organizations via online services that connect lenders and borrowers. There is no intermediary (financial institution) between the lender and the borrower. User registration is the first step in the process, which also includes the gathering of online documentation, client identity and verification, loan approval, loan distribution, and loan recovery.

Growth Drivers

Increasing Popularity of Digital Banking Services

Lending operations are rapidly becoming digital due to globalization and the increased usage of Internet banking. This is one of the most key factors influencing how DLP is used in the banking, financial services, and insurance (BFSI) industry to make better decisions, provide better customer experiences, and save money. Also, due to the coronavirus infection (COVID-19) outbreak, financial institutions around South Africa are increasingly embracing digital channels to lend money and manage pandemic challenges. The market's overall expansion is further fueled by the rising use of financial services.

Restraints

Low Awareness and Lower Acceptance

The time-consuming and difficult traditional loan techniques are preferred by many businesses. Due to their fixed customer base and established techniques of credit underwriting, they are unable to adopt innovations. Therefore, it is anticipated that the low adoption of the P2P lending platform will hinder market growth during the forecast period. Also, a lack of understanding about P2P lending as well as a lack of training and skill sets to manage them are the key causes of the poor adoption of automated and advanced P2P lending procedures. These elements will significantly impede market expansion.

Impact of COVID-19 on the South Africa P2P Lending Market

The COVID-19 crisis led to expansion in all areas of fintech, including payments, lending, and conventional banking. Lending platforms have witnessed a significant increase in users despite having fewer users overall. This is partly because many businesses needed rapid loan approvals to continue operating during the tough times. To stop the infection from spreading, people have started to pick contactless transactions. Also, banks have been using digital means to distribute loans under the Paycheck Protection Program more often throughout the COVID-19 pandemic.

South Africa P2P Lending Market

Segmental Coverage

South Africa P2P Lending Market - By Type

On basis of type, South Africa P2P lending market is split into Consumer Lending and Business Lending segments. The consumer lending segment is a higher contributor to the growth of South Africa P2P lending market. It occurs between two people in the P2P loan sector. Rising disposable income and increased urbanization are driving the expansion of the peer-to-peer (P2P) lending market sector during the forecast period. The business lending segment is expected to be the faster-expanding segment during the forecast period. In the peer-to-peer (P2P) lending market, business financing is gaining traction. The expanding number of small and medium-sized businesses, as well as start-ups, is fueling South Africa (P2P) lending market.

South Africa P2P Lending Market - By End User

On basis of end user, South Africa P2P lending market is divided into Consumer Credit Loans, Small Business Loans, Student Loans, and Real Estate Loans segments. The small business loans segment dominates the South Africa P2P lending market. Small business loans are necessary to start a new business, invest in infrastructure, upgrade to the latest plant, expand operations and machinery, maintain inventories, or raise working capital, which ultimately drives the market growth.

Competitive Landscape

Major players in the South Africa P2P lending market include RainFin, FundingHub, Ozow, Fincheck, Lulalend, Naledi3d Factory, Fedgroup, Edge Growth, PeopleFund, and Inclusivity Solutions. The key strategies used by these market leaders are new product launches, mergers & acquisitions, and alliances. To grow their market share, these companies are also focusing on investing in innovations, collaborations, and expansions.

Scope of the Report

By Type

• Consumer Lending

• Business Lending

By End User

• Consumer Credit Loans

• Small Business Loans

• Student Loans

• Real Estate Loans

• Others